Comments on: P3 Revision

By: Oksana

Oksana — Wed, 13 May 2009 22:17:44 +0000

Organic food store at the moment experience great competition from large supermarkets as people cut back on their spending and opt for traditional products in the period of economic downturn.
Shop will have to do sale promotions to attract the ethical shoppers emphasizing on the quality and nutrition benefits of the products. Shop is conveniently located on the busy street and therefore must take an advantage of its position.
Adverse exchange rates such as weak pound and strong dollar and euro will effect purchasing power of the shop if its imports some of its products from abroad.
Government implements various grants for organic farmers. This may be reduced due to lack of finance. It can lead to liquidity problems for organic farmers and will effect supply of the produce to the shop.
Suppliers may reduce payment terms due to credit shortage and new terms can be difficult to achieve.
Global warming may lead to adverse weather conditions that will affect the plants and in turn lead to shortages in supply and high prices.

By: farhana

farhana — Mon, 11 May 2009 01:14:21 +0000

In the current recession, organic foods are likely to be labelled as luxury goods therefore due to the reduction in disposal income this may lead to customers purchasing less, leading to a loss in income generation.

The shop may need to reduce their prices to retain existing customers in competition with non organic foods which are much cheaper by other retailers, such as Asda.

Customers may even decide to change from purchasing organic foods to non organic, a loss in customers to competitors causing a fall in sales for the shop.

Purchases from suppliers may need to be cut to a lower re-oder level if customers seem to have cut down in buying from the shop because customers changed their purchasing behaviour due to a lower disposable income.

Large supermarkets, such as Asda provide cheaper organic food, and so prices may need to be set at the same level or lower with the aim of retaining customers, but this may not be possible if costs are not covered, which could lead to a loss making business.